Question: Dr. Jones is deciding on whether to open a Surgery Center. He estimates that the annual Fixed Overhead costs for the center will be $100,000.

Dr. Jones is deciding on whether to open a Surgery Center. He estimates that the annual Fixed Overhead costs for the center will be $100,000. He also estimates that he will have $75,000 is fixed staffing costs. Dr. Jones accountant has told him that his variable costs will be $250 per surgical case in staffing costs, plus an additional $75 per case in medical supplies. In studying the fee schedules of Medicare and Blue Cross, Dr. Jones feels that he will earn approximately $750 per case based on both the payer mix and types of procedures he will be performing.

What is Dr. Jones' incremental profit per case?

Based on the information given, what volume of cases does Dr. Jones need to have in order to break-even?

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